Merkel: EU needs more intervention rights on budgets

"We have made good progress on strengthening fiscal discipline with the fiscal pact but we are of the opinion, and I speak for the whole German government on this, that we could go a step further by giving Europe real rights of intervention in national budgets," Merkel told the Bundestag lower house.

She also said a proposal put forward by German Finance Minister Wolfgang Schaeuble to create a European currency commissioner was a possible way forward and that more European rights should be accompanied by a stronger European parliament.

Merkel advocated the creation of a European fund to invest in specific projects in member states which she said could be funded by a financial transaction tax.